Background: I am a first time Acquisition Entrepreneur and would like to build a portfolio of businesses, ideally with some synergy that can be exploited. So the industry I choose and the first business I buy has to succeed. I do not want to be heavily involved in the day to day after say 9 months post acquisition.
I am heading down tomorrow morning to spend the day with the seller of a residential roofing company. It is 2 hours south of St. Louis in a town of about 80k people. The asking price is 750k. The company historically###-###-#### has done 2 million revenue with SDE around 300k. In 2019 he did 4 million revenue with SDE of 500k###-###-#### annualized is about 3.5m revenue and 400k SDE. There are a number of factors at play as to why the numbers increased so dramatically.
1. a big storm hit the town that year.
2. He got a large commercial contract (nursing home)
3. He knew he wanted to sell and the broker told him he had to start putting all of his cash jobs into the books to elevate the value of the business.
Some risks I can see: The owner is very involved. Business is run out of his house. Only has 3 employees, all crew leaders. He contracts the labor from some guy named Fernando.
Some Opportunities: Seller is willing to finance 80% of the deal...Why? I think he wants to avoid taxes somehow. But maybe he thinks a bank won't loan the money to a buyer without roofing experience? I do not have more details yet on his financing offer.
He does no marketing. Has an A+ rating with BBB but doesn't do yelp or Homeadviser etc.
I am hoping for and open to all advice on the roofing industry itself, what to look for and ask about while spending the day with him tomorrow, how to negotiate a better deal, how to find a general manager to run the operations etc.
I know this was long winded. Thanks to any of you who read it.
Anyone bought or owned a roofing business? Tips, advice, cautions appreciated
by a searcher
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